The fear at the beginning of 2012 that mortgage company penalties paid to state and federal regulators, in combination with a “flood” of foreclosed properties on the marketplace, would sink the real estate industry into a quagmire for years to come. None other than the esteemed Wharton School of Business at the University of Pennsylvania warned of a “logjam” that might be “unleashed” to derail the market as a whole. California and the Southland in particular, was thought to be particularly vulnerable given the challenges in our real estate markets.
Instead, the exact opposite outcomes materialized: foreclosures plummeted, inventory shrunk, demand (and therefore prices) increased and interest rates remained at all-time lows. All of these are factors which have supported the recent uptick in real estate activity in Huntington Beach and cities across the Southland. Talk about a positive message on which to end the year; it is not often that markets run counter to the predictions but in terms of Southern California real estate, stabilization seems to be the key word, which is leading to renewed optimism and investment.
In short, the loan modification plans are working, even if they include reductions in principal loan amount. After all, the banks would rather collect 100% of a modified mortgage rather than go through the rigors of foreclosure only to sell the property at less than marketing value. And institutional investors are gobbling up those properties which do enter foreclosure, thus also limiting the number of distressed real estate available to the public. And by avoiding the “perfect storm” of foreclosures, we are in fact seeing increases in pricing, a general positivity that should carry over into 2013 and growth in the number of new homebuyers, sellers and those looking to upgrade their address. In other words, the threat of foreclosures undermining the industry seems to have passed over Huntington and its neighbors. If you are looking to get into this viable and revitalized area, just give me a call to begin the discussion. I’m happy to help!